North Somerset Citizens Advice - Investigating the Impact of Council Tax Support

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1 North Somerset Citizens Advice - Investigating the Impact of Council Tax Support October 2015 Introduction In April 2013 North Somerset Citizens Advice and Advice North Somerset launched a research project investigating the local Council Tax Support (CTS) scheme. The findings discussed in this report relate to respondents who were in receipt of council tax support when they completed the survey in April 2015, and some who were also in receipt of council tax benefit before the changes in April For a breakdown of respondents, please see the appendix. Why are we interested in this topic? In April 2013 the national scheme of Council Tax Benefit was abolished by central government. This meant one national scheme was replaced with 326 local authority schemes across England, along with a 10% cut in the funding given to local authorities to provide this support. Before the change, it was possible for those on a low income, such as those on benefits, to receive up to 100% support with their Council Tax. Following the changes, North Somerset Council introduced a Council Tax Support Scheme meaning that local people of working age, regardless of their circumstances, had to pay a minimum contribution of 22%, which increased to 24.5% in 2014/15. A comparison, including a full breakdown of the support provided by all schemes across England can be accessed at 1

2 Findings How the change has been managed Research conducted by the New Policy Institute for the Joseph Rowntree Foundation has looked at how local authorities are managing the change to localised CTS by categorising councils based on how good their scheme is for the council - measured by how much of the 10% cut was recouped, and how good it was for claimants - measured by how little support was cut. This research found that North Somerset Council recouped 124% of the reduction in funding. Combined with the level of support offered to claimants, this resulted in the North Somerset CTS scheme being grouped with 30 others that provide the least support for claimants while recouping the most for the council. North Somerset Council scheme is one of these 31 local authorities The report can be found at: A full breakdown of the data explaining how all schemes across England were categorised can be found at: 2

3 Collection rate The end of year collection rates show a very small decrease from 97.9% in 2012/13 before CTS was introduced to 97.6% in 2014/15 (information retrieved from Quarterly Return of Council Taxes and Non-Domestic Rates QRC4 available at: However, this masks the difficulty local people report in finding ways to pay. Focusing on the end of year figure fails to show how many people got in to arrears during the year and found a way out of this, or were subject to court action such as being issued a liability order. In this same period where the collection rate fell by 0.3%, the amount of liability orders issued rose from 8,081 in 2012/13 to in 12,484 in 2014/15. Further research is required to understand: why the collection rate has remained stable but the amount of liability orders has risen how many of those liability orders were for claimants in receipt of CTS Experience How are local people experiencing the CTS scheme? The survey we conducted asked local people who currently claim CTS about their experience of the support they receive in a bid to uncover some of the financial and non-financial impacts of the CTS scheme. 31% told us they haven t been able to pay 36% have cut back on essential items e.g. gas 67% feel stressed and worried about their bill 56% now have relationship problems 3

4 What happens if you can t pay? We have already mentioned that in 2014/15 12,484 residents were issued with a liability order because they had not paid their council tax. 56% of our survey respondents in receipt of CTS reported being in arrears. These figures suggest that although end of year collection rates have remained high, there may have been an increase of in-year arrears. This raises concern because of the costs associated with the collection of council tax arrears. The combination of a liability order and enforcement action means costs added on top of council tax debt can soon rise to over 300 if bailiffs are instructed. It is welcomed, as stated in the North Somerset Council Debt Recovery Policy (available at: ocuments/debt%20recovery%20policy%20(pdf).pdf ) that court action will not be taken against CTS claimants for debt under the level of summons costs, which is currently 95. However, more work is needed to understand: why residents in receipt of CTS support are unable to pay how processes can be improved so enforcement action can be avoided 4

5 Council tax arrears The graph below shows the amount of issues (aka problems) per quarter relating to council tax arrears that we have seen in bureau since April The graph below shows the percentage of all debt enquiries that relate to council tax arrears per quarter that we have seen in bureau since April We cannot attribute this increase to the CTS scheme. However, there is a clear trend that requires further investigation to understand the causes, impact and possible solutions to this growing problem. 5

6 What do we think should happen next? Citizens Advice and North Somerset Council should work together to understand: why the collection rate has remained stable but the amount of liability orders has risen how many of those liability orders were for claimants in receipt of CTS why residents in receipt of CTS are unable to pay how processes can be improved so enforcement action can be avoided 6

7 Appendix client profile The following tables provide a breakdown of survey respondents: 7

8 The Citizens Advice service provides free, independent, confidential and impartial advice to everyone on their rights and responsibilities. It values diversity, promotes equality and challenges discrimination. The service aims: To provide the advice people need for the problems they face; To improve the policies and practices that affect people s lives. North Somerset Citizens Advice Badger Centre 3-6 Wadham Street Weston-super-Mare North Somerset BS23 1JY Citizens Advice is an operating name of The National Association of Citizens Advice Bureau. Registered charity number